Home Business Why is the Taliban cracking down on crypto exchanges in Afghanistan?

Why is the Taliban cracking down on crypto exchanges in Afghanistan?

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Why is the Taliban cracking down on crypto exchanges in Afghanistan?

Following the Taliban takeover last year, the use of cryptocurrency in Afghanistan has increased, but it seems that the police are now cracking down on the local market.

After the Taliban took over Kabul, the Afghan capital, last year, Afghans turned to cryptocurrency as the legacy monetary system came to a halt.

Most bank offices had closed and those that were open saw long lines of people trying to withdraw money.

Donations and foreign payments were no longer possible through the banking system. Therefore, transferring funds directly to a person’s Bitcoin wallet was a more feasible option.

However, a year later, Taliban authorities are now cracking down on the local market, shutting down at least 16 cryptocurrency exchanges in the western province of Herat, according to Blockworks.

It was unclear which cryptocurrency exchanges were affected by the shutdowns.

According to Sayed Shah Sa’adat, head of the police’s anti-crime division, the central bank has banned cryptocurrency trading because the practice has spawned scams.

Sa’adat said all local crypto business owners have been arrested and their businesses shut down.

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In June, the Taliban-controlled central bank banned all online currency trading.

A bank spokesperson told Bloomberg that the practice is illegal and fraudulent.

After the Taliban returned, the United States blocked the group from accessing $7 billion in Afghan central bank reserves held in Federal Reserve accounts.

The Taliban are virtually isolated and, according to a former acting governor of the Afghan National Bank, the group has access to only 0.1 to 0.2 percent of these funds.

In February, the armed group said it would discuss whether to allow digital tokens as part of Islamic financial customs.

Religious experts had long predicted that the Taliban would ban cryptocurrency because it has aspects of gambling and uncertainty, which Muslims consider a sin.

Other Muslim nations have taken a more tolerant stance. For example, in the Dubai Free Zone, the United Arab Emirates allows cryptocurrency trading, while Bahrain has embraced digital assets since 2019.

In 2013, Roya Mahboob co-founded Digital Citizen Fund, a non-profit organization that teaches young Afghan women computer programming and financial literacy.

With 11 women-only computer centers in Herat and two more in Kabul, the organization has trained 16,000 women in everything from Windows software to robotics.

The organization refocused its efforts after the Taliban took over to train young women in bitcoin through Zoom video calls.

After a stock market crash that destroyed an estimated $2 trillion in value and drove many well-known companies out of business, governments from South Korea to the United States are tightening their controls over cryptocurrencies.

However, prohibitions on cryptocurrencies are often less. For example, like China, Afghanistan has joined the list of countries that have banned all bitcoin transactions.

Afghanistan is among the top 20 countries in the world for cryptocurrency adoption, according to a report published last year by blockchain research firm Chainalysis.

Source: World TRT

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